Ill-timed largesse

In July, the San Diego Unified School District promoted Lou Smith to chief administrative officer, putting him in charge of the district's financial and business operations while he maintains his role as district facilities manager, a job he's had since April 2001.

The new position required a new contract, and with it came a one-time payment of $35,000-compensation that a report CityBeat obtained from the district's accounting department categorized as “incentive compensation,” otherwise known as bonus pay.

The payment comes amid the district's announcement last month that it's almost $100 million in the red for the upcoming school year. Last year, the district was forced to cut $43 million to remain solvent.

Under his contract, Superintendent Alan Bersin was eligible for a $25,000 bonus this year, but he opted to decline the largesse, citing the ugly budget situation.

Smith, who's been lauded for saving the district's $1.2 billion school-construction program from near disaster, emphasized, through a district spokesperson, that the payment wasn't tied to performance “and thus shouldn't be reported as an incentive bonus.” Rather, he said, the money was part of a “close-out” settlement when he moved from his old contract to the new one.

Fifty percent of the $35,000 payment came from Prop. MM school-construction funds, 40 percent came from the district's general fund and 10 percent came from money earmarked for facilities management.

Smith signed on with the district in December 2000 after 30 years with the Navy, where he served as a civil engineer and also did three tours in Vietnam. In his three years with the district, Smith has been handed a bonus once-$27,000 in December 2001. Until his contract was renegotiated in September, he was eligible for $61,250 in bonus pay, payable Dec. 4.

A district spokesperson said that because his contract was renegotiated, he's no longer eligible for that amount. His new contract, however, carries with it the possibility of a $30,000 bonus next year, $35,000 the following year and $40,000 in December 2006. The new contract also entitles Smith to $41,000 a year in retirement benefits. Under his old contract, he's entitled to a $50,000 retention bonus, under a December 2000 agreement, if he stays with the district through December 2005. Under the old contract, that amount would have tripled.

Smith's salary, not including these bonuses and benefits, is locked in at $175,000 through December 2006. (Supt. Bersin, by comparison, gets $189,500 annually.)

Among education reformers, notably those tied to well-heeled foundations, there's a push for public education to adopt corporate trappings. Hence, school districts now have CEOs, CFOs and CAOs. Districts are also increasingly handing out signing bonuses and incentive pay to attract qualified teachers, and high-ranking administrators are lured by contracts laden with perks.

Real estate mogul Eli Broad, whose Broad Foundation has kicked down millions of dollars to support Bersin's controversial Blueprint for Student Success reform program, and who has lauded San Diego City Schools as a model district, wrote in a March 2001 article in the trade publication School Administrator, “I recognize that some educators are wary of corporate models of merit pay or pay for performance. However, a properly structured pay-for-results system can provide as strong a lever to promote dramatic improvement in schools as it has in organizations from other sectors.”

District Trustee Fran Zimmerman said that while she voted to approve Smith's latest contract, as well as his original deal, she's been wary of what she describes as “bonus-laden” contracts for district higher-ups. The shift to “chamber of commerce-style management of this school district,” she said, represents a “philosophical difference about the way public education should be run.

“This is not industry,” Zimmerman said. “This is a historically financially strapped sector of our society.”

School board President Ron Ottinger said there was some concern that Smith might go elsewhere if a new contract wasn't too his liking. “When we recruited Lou, we had to be competitive,” he said. The financial incentives in Smith's renegotiated contract, “is what it takes to recruit and maintain someone of his caliber,” Ottinger said.

Erik Olson, an organizer with the California School Employees Association, the labor union that's been hardest hit by layoffs, says highly paid district administrators aren't shouldering the burden being levied on their underlings. “That [$35,000] would hire quite a few [part-time] food-service workers or school bus monitors,” Olson said of Smith's lump-sum payment.

The district last year laid off all its school bus monitors-part-time workers who kept an eye on kids on the ride to and from school. After removal of bus monitors, at least one student went missing for several hours when he got on the wrong bus, and last spring, two girls from MacDowell Elementary were reportedly sexually assaulted by a male student on a school bus.